AIG 2013 Annual Report Download - page 280

Prior to January 1, 2012, in the case of repurchase agreements where we did not obtain collateral sufficient to fund
substantially all of the cost of purchasing identical replacement securities during the term of the contract (generally
less than 90 percent of the security value), we accounted for the transaction as a sale of the security and reported
the obligation to repurchase the security as a derivative contract. The fair value of securities transferred under
repurchase agreements accounted for as sales was $2.1 billion at December 31, 2011. Effective January 1, 2012,
the level of collateral received by the transferor in a repurchase agreement or similar arrangement is no longer
relevant in determining whether the transaction should be accounted for as a sale. There were no repurchase
agreements accounted for as sales as of December 31, 2013.
We also enter into agreements in which securities are purchased by us under agreements to resell (reverse
repurchase agreements), which are accounted for as secured financing transactions and reported as short-term
investments or other assets, depending on their terms. These agreements are recorded at their contracted resale
amounts plus accrued interest, other than those that are accounted for at fair value. Such agreements entered into
by the DIB are carried at fair value based on market observable interest rates. In all reverse repurchase transactions,
we take possession of or obtain a security interest in the related securities, and we have the right to sell or repledge
this collateral received.
The following table presents information on the fair value of securities pledged to us under reverse
repurchase agreements:
Securities collateral pledged to us $ 11,039
Amount repledged by us 33
Total carrying values of cash and securities deposited by our insurance subsidiaries under requirements of regulatory
authorities or other insurance-related arrangements, including certain annuity-related obligations and certain
reinsurance agreements, were $6.7 billion and $8.9 billion at December 31, 2013 and 2012, respectively.
Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the
members to own stock in these FHLBs. We owned an aggregate of $57 million and $84 million of stock in FHLBs at
December 31, 2013 and December 31, 2012, respectively. To the extent an AIG subsidiary borrows from the FHLB,
its ownership interest in the stock of FHLBs will be pledged to the FHLB. In addition, our subsidiaries have pledged
securities available for sale with a fair value of $80 million and $341 million at December 31, 2013 and 2012,
respectively, associated with advances from the FHLBs.
Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade
of our long-term debt ratings. The actual amount of collateral required to be posted to the counterparties in the event
of such downgrades, and the aggregate amount of payments that we could be required to make, depend on market
conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the
downgrade. The fair value of securities pledged as collateral with respect to these obligations approximated
$4.2 billion and $4.4 billion at December 31, 2013 and December 31, 2012, respectively. This collateral primarily
consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged
or resold by the counterparties.
Insurance — Statutory and Other Deposits
Other Pledges
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AIG 2013 Form 10-K262
ITEM 8 / NOTE 6. INVESTMENTS
(in millions) December 31, 2013 December 31, 2012
$ 8,878
71
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